FISCAL NOTE

Date Requested: February 13, 2017
Time Requested: 01:44 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1279 Introduced
CBD Subject: Taxation, Workers Compensation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of this bill is to allow an employer to extend workers’ compensation insurance coverage to an employee engaged in volunteer fire fighting and allowing employers a tax credit for the cost of providing workers’ compensation insurance to employees engaged in volunteer fire fighting.
    
    According to our interpretation, this bill could result in a General Revenue Fund decrease of up to $5.0 million if all employers choose to provide workers’ compensation coverage to employees who volunteer as firefighters. Not all employers currently provide or are likely to elect to provide such insurance for their employees who are volunteer firefighters. In 2011, the West Virginia Legislature set up a workers’ compensation subsidy to aid volunteer fire departments at a cost of $5 million spread out over multiple years. Volunteer fire departments are already required to provide workers’ compensation or be decertified unless the volunteer firefighters are covered by an employer. Volunteer fire departments would not be totally relieved of their workers’ compensation obligations as a result of this bill because only a fraction of the affected volunteers would likely receive coverage from an employer.
    
    Additional costs incurred by the State Tax Department would be $23,000 in FY2019 and $10,000 for each year thereafter.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 10,000
Personal Services 0 0 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -5,000,000 -5,000,000


Explanation of above estimates (including long-range effect):


    According to our interpretation, this bill could result in a General Revenue Fund decrease of up to $5.0 million if all employers choose to provide workers’ compensation coverage to employees who volunteer as firefighters. Not all employers currently provide or are likely to elect to provide such insurance for their employees who are volunteer firefighters. In 2011, the West Virginia Legislature set up a workers’ compensation subsidy to aid volunteer fire departments at a cost of $5 million spread out over multiple years. Volunteer fire departments are already required to provide workers’ compensation or be decertified unless the volunteer firefighters are covered by an employer. Volunteer fire departments would not be totally relieved of their workers’ compensation obligations as a result of this bill because only a fraction of the affected volunteers would likely receive coverage from an employer.
    
    Additional costs incurred by the State Tax Department would be $23,000 in FY2019 and $10,000 for each year thereafter.
    



Memorandum


    The stated purpose of this bill is to allow an employer to extend workers’ compensation insurance coverage to an employee engaged in volunteer fire fighting and allowing employers a tax credit for the cost of providing workers’ compensation insurance to employees engaged in volunteer fire fighting.
    
    The proposed bill may shift at least part of the cost of the coverage to the State budget as employers who pay for the extended coverage may receive a tax credit that offsets payments. This reduces General Revenues and effectively pays for the extended coverage through the State budget.
    
    A constitutional issue could be raised regarding the provision of this tax credit to employers and workers’ compensation coverage for volunteer fire fighting activities while coverage or credits for other volunteer activities of a similar or disparate nature is not available.
    
    The proposed bill does not provide for a rule-making authority, does not address any carryback or carry-forward provisions, and does not specify whether the credit is refundable. Further, the lack of an effective date could lead to administrative difficulties due to timing. The title of the proposed bill does not mention the penalties imposed in subsections (e) and (f).
    
    The language of the proposed bill is inconsistent in terminology (e.g., “Volunteer Fire Department,” “volunteer fire department,” “volunteer fire company,” and “volunteer fire fighting department”).
    
    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov